While financial institutions integrating Ripple remain responsible for employing their own compliance measures, Ripple offers a way for your bank to reduce operational and risk management costs.

Reducing Operational Costs Through Pre-Transaction Communication

Today, sending banks transmit messages to receiving banks without any possibility of a response. If any information is incorrect, the payment will fail and has to be repaired or returned to the sending bank, which creates operational cost for both banks. In addition, payments take 2+ days to settle and are transferred simultaneously but separately from payment information, meaning there is a high risk of miscommunication leading to payment failure.

Ripple improves the efficiency of communications between sending and receiving banks. Pre-transaction communication on Ripple enables both banks to validate all required payment information — such as customer identity and risk profiles, fees, FX rates, and expected times of delivery — before funds are transferred. This capability allows banks to know whether a payment will execute, thus eliminating the need to return failed payments. Any issues with a payment are immediately visible and can therefore be rectified more quickly than in the traditional banking system. Pre-transaction communication on Ripple greatly reduces operational costs and risks associated with repairing and returning invalid payments.